Tuesday, December 20, 2011

John Liu And the Mayoral Race: We Are Confronted by A Misfortune. Can Misfortune Be Turned Aside?

Who ever really knows what to expect from a politician? Almost all politicians come equipped with an extremely likeable side, a side to charm you if you just relax and enjoy it. Most often though, when we think of politicians we think of the side that brings infuriating disappointment: They convince us that they can be counted upon to do one thing and then do something quite the contrary.

If no one ever really knows what to expect, who’s to say what we could really expect were New York City Comptroller John Liu to become the next mayor of New York?

The New York Times has recently run two articles counting John Liu out of the race for mayor. One was an assessment of the entire field of candidates running for mayor written by Kate Taylor* and the other was an article that tells us a federal investigation into Liu’s fund-raising practices is continuing with an effort to hunt up more witnesses. (See: To Find the Perfect New York Mayor, Only 2 Years Left, by Kate Taylor, December 11, 2011, and More Liu Donors Said to Be Examined in Fund-Raising Inquiry, by William K. Rashbaum and David W. Chen, December 15, 2011.)

(* The Times seems to be building up Ms. Taylor’s profile with all manner of assignments, some of them rather fluffy and others, like this one, more consequential although her ability to put PR in perspective to discern an accurate big picture is not in evidence.)

The Times articles essentially evaluate as nails in the coffin of Liu’s mayoral race the federal investigation into Liu’s fund-raising. The investigation is the result of an apparently successful FBI sting operation. How bad is it?: The article about who is in the potential field of candidates for mayor doesn’t even include Liu’s picture amongst the panel depicting the panoply of contenders (see above).

If the sting operation succeeds in knocking Liu out of the race it will be unfortunate from the standpoint of Noticing New York's family of concerns in one respect: As the collection of alternative candidates considered in the December 11th Times article emphasizes, no one else likely to run is likely to pose the same threat to the Bloombergian real estate industry-dominated status quo as John Liu. The threat Liu presents to that established order calling the shots in this city is best judged by his record. As a member of the City Council Liu stood out as part of a small minority willing to reject the dictates of Bloomberg’s Quinn (serving as Speaker of the City Council): He voted in a principled manner on projects such as the irredeemably tainted Walentas Dock Street project. As City Comptroller he continued to take on Bloomberg when almost nobody else did.

It is difficult to say for sure what exactly a Liu-as-mayor future would hold because politicians don’t come with guarantees but the other candidates who don’t have Liu’s record aren’t even offering politicians' promises to change the business-as-usual prominence that real estate money gets in this city. If those candidates were, it would contradict their records.

None of this is to endorse the kind of improper fund-raising the FBI sting operation caught the Liu campaign in. It was improper. The Liu campaign was caught taking larger-than-permitted campaign contributions from one individual and then fictitiously ascribing those contributions to multiple other individuals so as to ostensibly come within the per donor contribution limits. If you want to know what I suspect about the way the FBI sting was structured (which is to say it's not what I actually can claim to know), my guess is that the FBI had information leading it to believe that the Liu campaign might already have been engaging in some sort of similar “bundling” practice so that they expected that the campaign would go along when an FBI agent posing as a political donor proposed to structure his contribution in this way. The FBI may now be looking for other witnesses, hoping to show that the result of the sting operation was reflective of a pattern.

Campaigns ought not to engage in such tactics to raise money. As far as we know, during the last mayoral campaign Tony Avella, similarly a foe of the real estate industry’s domination of the local politics, ran a clean fund-raising campaign. He also raised virtually no money when he ran for the Democratic Party nomination, which is why we wound up with Bill Thompson as the Democratic candidate for mayor.

Any candidate running against the real estate powers-that-be in this city is facing an uphill battle in terms of fund-raising. That's because of the outsized value of political favors that are routinely handed out to the big fish in the real estate industry here.* Consequently, a huge amount of money pours in to those who will play this game and not upset this applecart. It's true that wealthy real estate industry executives are similarly subject to limits on the campaign contributions they make but they can get around those limits by having their highly paid employees also contribute to candidates. This can be accomplished, for instance, by having an appreciable portion of bonuses to a number of employees flow right through to a campaign in one nice big bundle. It’s a monied industry so it all adds up very fast.

(* It is worth noting that self-interested political donations from large industries are typically driven by what in economic terms is described as "rent seeking" which means that those making the donations are interested in government handouts for which the donating entities will give the public the least possible in return.)

Does this bundling sound a lot like the prohibited conduct the Liu campaign got stung for? Yes, it does. It is similar and if a real estate boss flowed bonuses to his employees with an overt enforceable directive that all or some of those funds be forwarded as campaign contributions to an identified candidate it would be tantamount to the same thing. Not only that, it would also be illegal. Illegal, yes, but it would be harder to prove and harder to catch in a sting operation. Besides, even if they are not the directing bosses, those who are highly paid in the real estate industry don’t have to be made subject to a directive to understand why it is in their interest to make contributions to those certain candidates likely to bestow benefit upon their companies.

Real estate executives can also send bundles of contributions that exceed the limits to which they are subject as individuals by having family members make campaign contributions. Or they can send funds to a national or central campaign rather than to the campaigns of the particular candidate for whom they have reached their personal donation limit. Handled the right way they will still get credit for future real estate-oriented political favors.

The Times article on the potential field of mayoral candidates in the same sentence that dismissed Liu as politically crippled mentioned that mayoral “hopeful” Anthony D. Weiner was sidelined by scandal. Weiner with his famous tweeted underwear photos (and more important his deceitful denials on the subject) clearly brought himself down, but it also clear that Weiner was targeted when he was brought down, not because he was running for mayor, but because it was valuable for the national Republicans to bring the congressman down. On national issues like healthcare and tax and budget issues Weiner had a spine and a sharp intellect and a sharp tongue. Noticing New York was never likely to have supported Weiner for mayor: Mattering less than the idiosyncrasy of his sex life (though his stupid and dishonest disavowal was very bad) would have been that Weiner did not oppose Atlantic Yards (a critical touchstone for all NYC politicians) and was against bike lanes.

Perhaps the Times article did not need to mention (as it didn't) that also viewed as politically sidelined is another mayoral “hopeful” of the past: Brooklyn Borough President Marty Markowitz. One of the things assisting this safely sidelining of Mr. Markowtiz was the Times own front page story this October about Markowitz's questionable practices when it comes to campaigning and fund-raising; he runs four charities that operate like political campaigns and real estate developers like Forest City Ratner (the Atlantic Yards mega-monopoly supported by Markowitz) pay into them. See: From Brooklyn Office, Mixing Clout and Charity, by Liz Robbins and Alison Leigh Cowan, October 24, 2011.

That October article mentioned that Markowitz “is considering running for mayor in 2013.” Why did the article run when it did? Norman Order in Atlantic Yards Report noted that the Times incorrectly asserted that:

Mr. Markowitz’s role in fund-raising for his nonprofit groups has gone virtually unquestioned.

According to Mr. Oder's correction in his first article on the subject:

No, it hasn't. It has gone virtually unquestioned by the Times. The New York Daily News (9/15/08), the Brooklyn Paper (9/18/08), and the New York Post (10/10/08) were all on this topic three years ago, albeit not in such a thorough manner.

Noticing New York also provided such coverage: Monday, October 20, 2008, “Charity?” We Begin to Groan. That article also noted how City Council Speaker Christine Quinn was caught around the time of her first campaign for mayor using fake charities to route money for political purposes. (Just a few years later she’s now considered a front-runner in the 2013 race.) More important, however, the article described interrelationships between Markowitz’s charities and Bloomberg-controlled charities (Markowitz’s charities get money from the Bloomberg ones) and similarities between what Markowitz does with his charities and Bloomberg does with his.

In a follow-up Atlantic Yards Report article about the Times front page Markowitz story Norman Oder observed, referring back to Noticing New York coverage:

Yes, the Times article focused on real estate firms and businesses that had reason to seek Markowitz's favor.

However, it omitted, curiously, New York City Mayor Mike Bloomberg, who's known for an even more elaborate and sophisticated charity strategy, as Noticing New York's Michael D. D. White has extensively analyzed.

Mr. Oder also offers his thinking that the timing of the Times Markowtiz article can perhaps be explained as an effort to sideline Markowtiz as a mayoral candidate:

Perhaps this article had been in long gestation.

Or maybe it was goosed by supporters of a political rival aiming to ensure that Markowitz, hardly an aggressive campaigner for 2013, stays out of the mayoral race.

Any effort to sideline Markowitz would not be motivated by the fact that Markowtiz doesn’t support the real estate industry. He is certainly an indefatigable supporter of Atlantic Yards in the face of any and all inconvenient facts. The reason to sideline the hyperactive, hyper-promotional Mr. Markowitz is that he is a lose cannon who can't be taken seriously: He's so perpetually a promoter that like Spinal Tap's fabled volume amplifier dials the only way he can surmount his own din is by assigning volumes equivalent to "eleven" and beyond to a scale that tops out at ten.

The Times article about Markowitz engages in a frequent Times stylistic device: It walks right up to the line of proclaiming that something wrong in local politics is illegal and then doesn’t cross it.

Though the Times clearly used the New York City Conflict of Interest Board as a resource to write the Markowitz article it did not in that article communicate the rule that it is illegal for a political official to require a donation to a charity in connection with that individuals’ exercise of a discretionary act by them as a public official. In other words it is illegal to bribe a public official and you can’t get around that rule by taking a bribe in the form of a donation to a charity you identify. The Times article doesn’t communicate that rule but it implies that it is there and that Markowitz has not broken it only in “wink, wink, nudge, nudge” terms.

The article quotes one Markowitz statement that “there was no quid pro quo here” and includes his denials “that there was any connection between donations and his role as borough president” by virtue of which conceptual separations (to the extent they can validly exist) allow Councilwoman Letitia James to say of the Atlantic Yards mega-project (which she opposes) “He [Markowtiz] is taking advantage of a loophole in the law.” (According to the Times article: “Forest City is one of the biggest contributors to Mr. Markowitz’s charities, having given approximately $1.7 million.”) The Times reports that Markowitz, discounting connections, “brushed aside questions about whether donors might feel compelled to give because of his political influence.”

At the same time the Times reports (not speaking specifically about Atlantic Yards) that donors “recalled that he [Markowitz] was relentless, seemingly unable to take no for an answer” and that one donor said “He took my arm and twisted it off — yeah, he more than asked me, he kept coming at me, until finally I said yes.” The intermixes all of this this with accounts of situations where it certainly looks as if well-timed donations went along with Markowitz taking positions favorable to the real estate industry donors, including a Markowitz change in stance on Wal-Mart after a bundle of $150,000 donations from Wal-Mart executives.

You may not believe Markowitz when he is quoted in the Times article as saying, “I am not pitching them to give me money, and me in turn give them anything,” but so long as you can’t prove it wrong you might not have a provable violation of the law however close it may be. Is anyone thinking of an FBI sting operation for this purpose? Maybe not even a sting operation; maybe just a few wiretaps or subpoenaed e-mails instead?

The problem is that deciding to go after Markowitz on this one would raise the Bloomberg question. The Times article flings aside the Bloomberg question somewhat casually, literally with a parenthetical: “Mayor Michael R. Bloomberg, a billionaire, has his own charity that does extensive work in the city, but it is largely self-financed.”“Largely,” maybe (if you don't look at who Bloomberg sells his terminals to) but charitable donations to Bloomberg’s East River art project, Waterfalls, came in from real estate developers with whom the city was doing business, including, again, Atlantic Yard’s Forest City Ratner. And that is just the beginning of the problematic ways in which Bloomberg’s charities are politically used.

Returning to the topic with which we began, the weakening of John Liu as a candidate for mayor as a result of the FBI sting targeting his improper fund-raising techniques: It’s unfortunate that John Liu’s campaign staff didn’t stick to proper procedures to raise money. It’s unfortunate that when the FBI ran a sting operation the Liu campaign got caught doing the wrong thing. It’s unfortunate that the result is that the candidate who was perhaps most likely to usher in change and counter the influence of the real estate industry may have been weakened as a result of the successful sting operation. It’s unfortunate that challenging the real estate industry and raising money to run against candidates financed by the real estate industry is such an uphill, lopsided battle. It’s also unfortunate that a great deal of what is making that battle so uphill and so lopsided involves practices by which the real estate industry contributes huge sums to politicians. It’s unfortunate that these real estate industry practices are permitted without challenge.(Above, Liu at a local Brooklyn fund-raiser.)

If Liu’s campaign has, as it appears, been weakened, it’s unfortunate because I have limited personal resources to donate to politicians who I think may effectively oppose the real estate industry and I am one of the ones who chose to make a donation to the Liu campaign. (My resources were limited enough so that I was not able to donate up to the full amount of the permissible limit.) If Liu’s campaign is weakened by this FBI sting then it is clear that the limited resources I donated with this cause in mind may go less far as a result. That means my voice is weakened. Although donations to Liu’s campaign may now not go as far as before I am still thinking that I may donate more money to Liu’s campaign in the future. What are my alternatives?

Who ever really knows what to expect from a politician? I am not 100% certain about what to expect from John Liu if he surmounts his present adversity to becomes mayor but it is possible that the real estate industry thought they had a fairly good idea of what to expect from Liu and did not want to see him mayor. Admittedly, that’s a bit of a conspiracy theory about why Liu might have been investigated but it goes along with the question as to why other politicians haven’t been investigated.

About Me

NOTICING NEW YORK & NATIONAL NOTICE are both independent entities managed by Michael D. D. White of Hop-Skip Enterprises. Michael D. D. White is an attorney, urban planner and former government public finance and development official. *** Noticing New York covers New York development and associated politics. National Notice covers national policy and economic issues *** Contact: MichaelDDWhite(at)gmail.com